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DOC - Anglorand Financial Services Group

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DOC - Anglorand Financial Services Group ...

    May 2002

    INVESTMENT OUTLOOK

    Contents

    ? SA Consensus Outlook

    ? The Benefits of being patient in Investment

    ? Company Review - Afrox

    ? April Buys and Sells

Dr Gad Ariovich, editor and Investment Consultant

    Contributors: Desmond Esakov, Charl Marais

SA Consensus Outlook

    Ave 90-009899000102SA - Business Cycle IndicatorsBusiness Cycle Indicators Lead104.2102.5106.4119.1122.5134.6Lag96.996.591.188.993.4Coincident93.993.489.693.596.298.1 130The coincident indicators suggest that the economy has Leadbeen on an upswing since mid-1999, but not with great 120momentum. The rise in the leading economic indicators

    probably signals a continued economic recovery. 110 Source: Reserve Bank 100Lag 90Coincident

    80

    70

    949596979899000102

     SA GDP

    Ave 90 - 00990001020304

    SA - GDP 1.42.13.42.12.1 (2.0)3.13.16 2002 - SD = 0.4 High = 2.8 Low = 1.3 Median = 2.0

     2003 - SD = 0.4 High = 3.8 Low = 2.1 Median = 3.05 4In line with the leading indicators the consensus

    suggests higher economic activity over the next three 3years, but at not particularly exciting rates. 2

    The GDP growth rate forecast for 2002 was revised 1upward in March to 2.1% from 2.0% suggested three 0months ago. -1 -2Source: Beeld Newspaper and Reuters -3

    -4

    909192939495969798990001020304

     SA- Growth Rate Private Consumption

    Ave 90-0099000102

    SA - Growth Rate Private Consumption 2.41.13.23.32.2 (2.0)

    Expenditure2002 - SD = 0.5 High = 3.0 Low = 1.0 Median = 2.2 Private consumption expenditure (PCE), the lion‟s 8.00share of GDP, is forecast to grow at 2.2% during 2002

    in comparison with 2.0% predicted three months ago. 6.00This upward revision is probably due to the expected

    increase in GDP and hence the additional consumption 4.00that should follow.

     2.00 Source: Beeld Newspaper 0.00

     -2.00

    -4.00 90919293949596979899000102

     1

    SA Gross Domestic Fixed Investment

    Ave 90-0099000102

    SA - Gross Domestic Fixed Investment1.6-6.01.33.03.3 (1.9) The Achilles heel of the South African economy is 12revealed when we look at fixed investment growth in

    10the economy. Over the last ten years GDFI grew by an annual average of only 1.6%. 8 6However, most economists foresee an improvement 4in GDFI, which is expected to grow by 3.3% this 2year compared to the 1.9% that was forecast a quarter 0ago. -2

    -4 -6 -8 -10 90919293949596979899000102

    SA Government Expenditure

     %SA - Government ExpenditureA positive trend in the South African economy was 25the declining rate of government expenditure. This

    may be a symptom of tight fiscal policy (other things

    being equal). 20In his budget speech in February the Minister of

    Finance announced his intention to increase

    government capital expenditure. This is contrary to 15the policy of the previous regime when most budget

    increases were directed towards consumption Trend10expenditure i.e. salaries and remuneration of civil

    servants.

    5 Source: Department of Finance

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    9091929394959697989900010203